When might up to 85% of a retired worker's social security benefits be taxable?

Social Security benefits may become taxable based on a retiree's total income level relative to specific thresholds established by the IRS. For individual filers, if combined income (which includes adjusted gross income, non-taxable interest, and half of the Social Security benefits) exceeds a certain limit, up to 85% of the Social Security benefits can be subject to federal income tax.

The thresholds are set at $25,000 for single filers and $32,000 for married couples filing jointly. When a retiree's income surpasses these thresholds, not only do they begin to face taxation on a portion of their benefits, but that portion can amount to as much as 85%. This nuanced understanding of how income impacts tax liabilities is crucial for retirees planning their finances.

Other options do not correctly account for the income thresholds necessary to trigger this taxation on Social Security benefits. Having dependents or an income below the threshold directly affects tax liability but does not lead to the taxable benefits scenario described in the question.